In a significant revelation, the Reserve Bank of India (RBI) has disclosed that the United States emerged as the primary source of Foreign Direct Investment (FDI) into India during the fiscal year 2023 (FY23). This development underscores the growing economic ties between the two nations and the continued appeal of the Indian market to American investors.
The RBI’s recent census on FDI flows unveiled that the United States was the leading contributor of FDI during FY23, injecting an impressive $103 billion into India’s economy. This marked a substantial uptick from the previous fiscal year FDI from the United States, translating to a robust 17.2% share of the total FDI inflow.
The data further revealed that Mauritius, the United Kingdom, and Singapore closely followed the United States in FDI contributions, collectively constituting a substantial 60% of the total FDI inflow into India during FY23. FDI from Mauritius accounted for 14.9% of the total, while the United Kingdom came next.
This comprehensive census relied on Foreign Liabilities and Assets (FLA) data, encompassing cross-border assets and liabilities of various entities including companies, limited liability partnerships, alternative investment funds, and partnership firms engaged in inward and outward direct investments.
Out of the 38,689 entities surveyed, a noteworthy 97% of responding Direct Investment (DI) entities were unlisted as of March 2023. These unlisted entities played a substantial role in India’s FDI equity capital, as per the RBI report.
On the flip side, concerning outward direct investment (ODI) by Indian entities, Singapore, the United States, the United Kingdom, and the Netherlands were the top destinations, collectively receiving 60% of the total invested during FY23.
Indian firms displayed their global ambitions as total ODI surged by 19.46%, reaching $109 billion in FY23 compared to the preceding year, as per RBI’s comprehensive study. Singapore emerged as the leading recipient of ODI from Indian firms, followed by the United States and the United Kingdom.
The census also highlighted a 6.9% increase in the market value of FDI in India during FY23, primarily driven by heightened FDI in unlisted companies. In terms of market value, ODI growth outpaced that of FDI, leading to a decrease in the ratio of inward to outward direct investment in March 2023 compared to the previous year.
In sector-specific analysis, the manufacturing sector continued to attract the lion’s share of FDI equity in both market value and face value. Among services, the “Information and Communication” and “financial and insurance activities” sectors were significant beneficiaries of FDI. Non-financial companies retained the majority of FDI equity at face value, with the market value of FDI in unlisted firms surpassing that in listed companies. These findings underscore the dynamism and evolving landscape of foreign investments in India’s rapidly growing economy.